GIP-88: Should Gnosis Chain provide liquidity for Circles Group Currencies in collaboration w/Proof of Humanity?

http://forum.gnosis.io/t/gip-88-should-gnosis-chain-provide-liquidity-for-circles-group-currencies-in-collaboration-w-proof-of-humanity/6983

author: Julio Linares, Clément Lesaege

Executive Summary:

CirclesUBI is a dapp running on Gnosis Chain which distributes a Universal Basic Income (UBI) via a P2P mesh credit protocol. Recently, a secondary issuance mechanism has been developed, called Group Currencies, as a way to bridge Circles to state money systems and crypto-assets. We propose that Gnosis Chain provides liquidity to two specific group currencies: the BER group currency administered by the Circles Coop e.G. and the Proof of Humanity (POH) group currency administered by the POH Origin team. By partnering with projects like Monerium, the goal is to pave the way to position Circles as a leading real world payment application that provides a UBI to people worldwide, strengthening the Gnosis ecosystem. The total costs of the project are 1,700,000 EUR for a period of one year from the moment the proposal gets accepted by the Gnosis DAO.

Specification

Circles (CRC) are minted as personal currencies at a rate of roughly 1 CRC per 1 hour or 24 CRC per day, with a yearly 7% demurrage on the money supply to incentivise circulation. The current socially agreed exchange rate of CRC to e.g. Euros is roughly 10:1. Group currencies are minted on a 1:1 basis, so that for each group currency minted, one personal currency gets deposited and locked into a specific treasury. Group currencies have three modes of issuance or minting:

1. Only the owner can mint.
2. Only the group can mint.
3. Everyone can mint.

In order to test group currencies at a larger scale, the following proposal seeks to grant the ability to exchange Circles group currencies for the following groups:

1. Proof of Humanity (Origin): in order to establish a clear collaboration and integration between POH-Origin and CirclesUBI, we propose a group currency that is used by POH-Origin users who join the Circles POH group currency as part of their basic income distribution system. POH is a sybil resistance registry that wants to use Circles group currency for UBI distribution. We propose that Gnosis Chain commits to fund a total of 500.000 EUR to bring liquidity onto their group currency (the liquidity will stay owned by the Gnosis DAO). More information about POH's recent fork can be found here. Technically, the PoH system would have a group currency manager for the creation of its Circles group currency. More details of that can be found here. For more technical information you can find a GitHub repository for the POH GC, which includes a README, here Additionally, here you can read a more in-depth presentation/ testing guide for the PoH Group Currency. We believe strong synergies can come from this collaboration between Circles and Proof of Humanity (Origin) in the space, both powered by Gnosis chain.

2. Circles Coop eG: as part of the ongoing Berlin Open Pilot, the Circles Coop provides Euros in exchange for CRC that businesses accept in return for goods and services as a way of increasing fungibility of CRC and incentivising local trade, enabling a people-powered, bottom-up basic income. You can see more about the work of the Circles Coop here. An analysis of the Berlin network (December 2022) by the NetFi team at Freiburg Institute of Basic Income Studies can be accessed here (using novel network science methods).

BER Exchange

Now that we have established an active economic network in Berlin with over 2000 individual participants and 20 merchant partners, the goal of the Circles Coop for the next year is to leverage BER to create a sustainable community-driven investment environment for small and medium businesses within the circles network in order to expand the basic income economy. The group currency administered by the Circles Coop will be called "BER'', after Berlin. The BER will be backed by production of goods and services coming from business sales in CRC. For the first years, we envision BER will be issued as a service by the Circles Coop based on the CRC that businesses in the network send to the Coop on a 1:1 basis. The Circles Coop will maintain a list of trustees or people who commit to give labour, capital or land to the network for the issuance of BER and other trade partners of the B2B network. After more knowledge and experience is gathered from the workings of BER on the Circles' web of trust, the Coop will begin to experiment with distributing group issuance rules to the wider economic network.

• BER will be sold for Euro-e to community investors at a discount.
• Euro-e will be given to the businesses in the Berlin network either as direct zero/low interest loans or as part of the ongoing pilot program.
• Community investors can use BER to buy goods and services or sell BER back for Euro-e at a fixed rate. This means that for the first year businesses can only access BER through their own sales or by buying/selling BER with Euro-e from other businesses or community investors.

Co-payment API & Multi-Token Display:

In order to do this, our aim is to make it easier for people and businesses to co-pay with their CRC & BER by enabling Euros-e payments and multi-token display of balances. The Circles Coop will leverage Monerium’s Euro-e stable coin, running on Gnosis, to develop a product that allows businesses to withdraw and deposit Euro-e tokens to and from their circles.garden safe wallet. Monerium is a SEPA authorised and regulated Euro stable coin. Users of Circles will be able to open a Monerium account with an IBAN to deposit Euro-e tokens to their Circles safe in order to use the open co-payment API functionality that we will develop. Businesses can sell things at a discount in Euros and benefit from higher sales experienced from participating in the Circles network. The Euro-e fee revenues generated are transparent and can be split as distributed equity for Circles users within the web of trust, for the pilot business costs and to cover the Coop's operational costs in order to break even. The end result is fully distributed credit issuance and internal liquidity provision made possible by the Circles mesh credit p2p protocol and distributed equity through the revenues generated from trade and investments to real production in the form of co-payment fees & community investment in BER.

The proposal would be to fund the Circles Coop with 1.2 million EUR from the moment this proposal becomes effective for a period of 12 months to:

• develop the co-payment API functionality in the circles.garden client and marketplace with Euro-e and BER
• Enable Euro-e, BER & CRC multi-token displays.
• develop the BER/Euro-e exchange functionality for the Berlin pilot (500k EUR)
• Research & Development (see below)

Part of this budget will be assigned by the Circles Coop to the Bitspossessed developer collective (600k). The Bitspossessed have been responsible for maintaining and developing the core Circles UBI infrastructure and client (circles.garden) since Sarah Friend and Andreas Dzialocha co-founded the Bitspossessed after technicaly launching CirclesUBI in October 2020, with the unconditional support from Martin Koppelmann. As the Circles Protocol is non-for-profit and meant to be a commons, the project relies on grants and public/private donations for its operations at scale. Having a budget for core development secured by the GnosisDAO will ensure the continued success of the project and group currencies as a whole. The Circles Coop's operational non-development costs will be secured by external private donations while the revenues generated from BER and co-payments are established, tested and proven to work. The Circles Coop aims to develop an open reproducible revenue model that allows other organised cooperatives, businesses and groups doing Circles to earn a revenue and break-even from fees in Euro-e/fiat co-payments, fiat withdrawals and deposits and group currency exchange fees.

Our end goal and vision for the future is to develop a multi-currency p2p privacy-preserving payment app that brings investment for local economies to thrive everywhere via CirclesUBI.

The Circles Coop eG commits to sharing the progress, main learnings and achievements in Q3 of 2024 before applying to further funding from the GnosisDAO community.

From mid 2024 to 2025, our aim is to develop with others in the ecosystem a Community Currency Exchange as a stand-alone product to decentralise and incentivise investment in group currencies in a privacy-preserving way. You can read more about the Circles Coop here and about our recent work on anonymous circles or the Circles Entropy Black Paper.

Research

In order to understand better what the different risk profiles and trade-offs of group currencies will be, we would like to include a budget to fund the research work of BlockScience and Circles Coop Research team, who will work in understanding and modelling what effects will the introduction of group currencies have on the Circles web of trust network as a whole, providing a "digital twin" of Circles with the capacity to perform deterministic backtesting and to perform extrapolation under stylized scenarios. One of the product outcomes of research is to determine, using network science, when an account is a real person or not and create the necessary metrics and detection mechanisms for sybil resistance. To that end, we request a total of 100k EUR to fund the great work of Blockscience and the Circles Coop research team for a period of six months.

Timeline for Circles Coop:

Research and Design (3 months): includes market research, design research, design work on ideation, mock-ups for new features, user stories, risk management on legal and economic fronts, network science and agent based modelling research, fine tuning business model, ongoing maintenance, stabilisation and improvement of technical infrastructure. Additionally, here we will review and do an audit of the group currency contracts to make sure everything is secure before deployment.

Decision-Making and Planning Implementation (1 month): Systematize and cross-analyze all the information gathered. Establish a common roadmap in all domains to implement agreed features, prepare campaigns for general users, improve Coop's BER minting and EUR redeeming procedures, start with design research for marketplace integration, ongoing maintenance and stabilisation of technological infrastructure.

Features Development and Implementation Phase 1 (3-4 months): Launch campaign to prepare users for new features. Work on the feature of multi-token display to start users getting used to this possibility, preparing circles.garden backend and marketplace for co-payment API. Test, adjust and launch first features. Design processes and platforms for community investment. Prepare a communication campaign to reach out to community investors. Ongoing maintenance and stabilisation of technological infrastructure.

Features Development and Implementation Phase 2 (3-4 months): Developing, testing and launching co-payment API features both on circles.garden and the marketplace. Campaign to introduce co-payment and start introducing economic justice/social investment narrative. Ongoing maintenance and stabilisation of technological infrastructure. Lastly, work will go into research and design of a currency exchange platform for Q3 2024.

Milestones:

Q1: first stage of Group Currency research completed, GC contract audits fully done.

Q2: Design of features and workflows of GC partially completed. Architecture & spec for payment API defined.

Q3: Design of features and workflows of GC completed. Testnet goes live to begin testing features and assumptions. Second stage of research completed.

Q4: Group Currency and co-payments implemented on the circles.garden wallet and marketplace

Budget

To summarise, the breakdown of the total budget of this proposal will be assigned as follows:

To Proof of Humanity Origin Team:

• 500k EUR for POH group currency. This liquidity belongs to GnosisDAO and will go to the users of POH directly. The idea is to provide liquidity on PHC (Proof of Humanity Circles). The money will be used to build a liquidity position of DAI-PHC. Since there wouldn't be any liquidity initially, the POH team will need to buy it overtime to avoid slippage, for around 50k€ of PHC over 5 months. The POH team can handle those operations and then send the liquidity tokens to the GnosisDAO. Giving the exact operations may be hard as price of PHC may vary.

Proof of Humanity's Gnosis Chain Safe: 0x636a9f58182B8132A08777A8De0Ca0f63bc0C3aa

To Circles Coop e.G.:

• 100k EUR for Research collaboration with Blockscience and the Circles Coop Research team (July 2023 to June 2024). Paid in DAI or USDC.

• 600k EUR for the Bitspossessed CirclesUBI Dev Team (July 2023 to June 2024). Paid in DAI or USDC.

Berlin CirclesUBI Pilot:

• 500k EUR for BER Pilot - as a commitment to exchange the Group currency (BER) for DAI or USDC. This liquidity belongs to GnosisDAO and will go to the businesses in the pilot directly. The BER minted will be sent to the Gnosis Treasury team in exchange for the stable coin at a fixed rate of ~10 BER to 1 Euro with a small discounted exchange fee as incentives for merchants. In the future proposals to GnosisDAO, we plan to create a social dex (community currency exchange) to allow for different forms of mutual staking, direct loans to the B2B network and more, in order to make the operation economically sustainable.

Circles Coop's Gnosis Chain Safe: 0xd9B58990cef69c2d222fD8f8CAf53477C5B79E28

Total:

1.7 million EUR for a period of one year.

A more detailed cost breakdown is given here.

Funding should be given for the respective team public addresses present in this proposal.

We look forward to our collaboration.

Circles Coop e.G & Proof of Humanity Origin